Posts Tagged: ‘Mortgage Rates’

Ferderal Reserve Paves Way For Lower Rates

January 26, 2012 Posted by Andre Hemmersbach

Wednesday’s Federal Reserve statement made mortgage rates drop right back to the record lows from several weeks ago. Since we hit that low, traders have been looking for some sort of clear direction on where the market would move next. The lack of rate positive news had made rates steadily creep higher over the last 3 weeks. Yesterday the Fed released a statement confirming they would continue to buy bonds and keep rates low until 2014. This statement coupled with low inflation reports are starting to make Quantatative Easing #3  ( QE3 ) rumors perculate through the bond market.

The market reacted positively with mortgage rates moving all the way back down to previous records. Strange as it may seem some investors were caught off guard with the big drop in rates, as the Fed’s actions are actually inflationary. Gold prices closed up over $35 dollars an ounce yesterday confirming that some investors believe inflation will be an issue. The reason the move to lower rates  is surprising is that  inflation is the mortal enemy of low rates and usually short-term moves by the fed like the one mentioned above would be trumped by longer term inflation fears.  

What does this mean to you? Don’t fight it!  Wall Street typically trades on rumors and sells on news. So the rumor of the Fed continuing to make money easily available is good for rates today but as soon as it is confirmed look for rates to spike.

Take advantage of today’s historically great affordability and low rates. If you have been thinking of buying a home, your new mortgage payment could be lower than the going rents in your market. If you already own a home with a good mortgage or have paid on your current mortgage for a long time, please let me help you look into a shorter term mortgage. It could save you thousands of dollars over the life of you loan.

Please let me be of assistance in helping you answer questions about financing your home.

Rate Update 8 4 2011

August 4, 2011 Posted by Andre Hemmersbach

Rate Update June 1 2011

June 1, 2011 Posted by Andre Hemmersbach

Mortgage rates have really fallen in the last 40 days and the news for some reason has not yet covered the story. Mortgage rates are just like gas prices in that they go up faster than they come down, so if you have been thinking about a refinance or a purchase now is the time to act! See chart below.

Bond Prices as of 6/1/2011 (Bond prices and rates have an inverse relationship so green is good for lower rates and red means higher rates.)

Continuing questions about the strength of the economy at home and concerns about the financial stability in Europe have once again made investors seek the safety of a steady income stream like those of treasury and mortgage bonds.

Current Mortgage Rates:
30 Year Fixed 4.49% 4.53 APR
15 Year Fixed 3.75% 3.75 APR
10 Year Fixed 3.25% 3.32 APR
10 Year ARM 4.125% 3.39 APR
7 Year ARM 2.875% 2.992 APR

All the above rates are for 80% LTV, SFR, Purchase loan, loan amount of $417,000, 780 FICO and Impounds. Call or email me with your scenario.

Sincerely yours,

Andre Hemmersbach

Mortgage Interest Rate Update and Forecast

March 17, 2011 Posted by Andre Hemmersbach

Believe it or not, the greatest determiner of affordability is not the sales price of the home but the interest rate on the mortgage that you use to qualify for the home. More on that at the bottom of this blog but understanding that fact it comes as no surprise to me that the question that I get asked the most is where are rates headed. Here is my quick crystal balling outlook for rates for the remainder of this year.

Short term: Rates are extremely volatile and if you are closing your transaction in the next 4 weeks my advice is lock your rate! These last three weeks’ rate drop has given us a breather from the daily rate increases of January and February. What has changed? Investor’s focus has gone from “Is the US economy recovering” to “what is going to happen in the Arab nations”, “what is going to happen with the Euro currency crisis” and “what is going to happen in Japan.” The answer to all of those latter questions point to instability and are terrible but are also temporary in nature. As soon as they are resolved, for better or worse, the attention will come back to our strengthening economy. Today’s initial jobless claims came in right at expectations and show strong signs of an improving labor market. A higher than expected Philly Fed Index, a regional manufacturing survey, came in much stronger than expected. And CPI (Consumer Price Index) came in hotter than expected. All three of these reports show a strengthening economic picture and the bond market pulled back (rates increased). Later in the day news from Libya and Bahrain had bonds rally and rates pulled back as investors sought the stability and the safety of the US markets and its currency.

Long Term: The improving economy, improving labor markets higher inflation all point to higher rates. These factors will push rates higher within weeks not months and will be intermixed with very volatile market moves. With each new economic report reaffirming the economy is pulling away from the abyss, slow as it may be, investors will know that the fed will need at some point increase their Federal Funds Rate to slow inflation and moderate growth. With each new economic report confirming stronger jobs, higher prices and higher profits investors will increase their requirements for higher returns on their investments.

Back to the real question: Wait for lower home prices or jump in now before rates move up more? The following figures may help you quantify your decision. On a $300,000 sales price with 5% down payment ($240,000 loan amount) your principal and interest payment at today’s rate of 4.625% is $1466.00 per month. If the sales price drops $10,000 to $290,000 but rates move to 5.625% your payment with 5% down is now $1586 or $120 more per month. Your qualifying income was $4442 per month and has now moved to $4806 per month.

If I can be of assistance to you or your family as it relates to real estate, please let me know. I would be honored to help.

Refinance Strategies That Pay

September 10, 2010 Posted by Andre Hemmersbach

Just because rates are lower does not mean that you will save money doing a refinance. Careful consideration should be given to a number of factors. If your loan officer is not asking the following questions while discussing a refinance, find a loan officer who you know and trust to help you make a solid financial decision: How long you have had your current loan? How long you are planning to stay in the property? Does it make sense to pay points or do a “No closing cost loan”?
Working with an experienced loan officer that can figure out your total cost over your financial time horizon is extremely important. Also understanding your loan balance at the end of that time horizon is a consideration that must be examined if you want to make a wise decision.
The following are a couple of refinance strategies we are advising our client to consider depending on their personal objectives.
Cash-In Refinance: In last year’s fourth quarter nearly one third of all refinances had principle reductions.
This is where a borrower actually pays “cash-in” instead of the standard “cash-out” transaction to lower the balance of the current loan. The idea is that you may get a better return for your money in your mortgage savings than you would in an investment account. Two scenarios where this could save money is in the removal of Private Mortgage Insurance (PMI) and lowering your loan amount from a “Non-Conforming Loan” (greater than $729,750) or a “Jumbo Loan” (greater than $417,000).
Term Reduction: Rates are so low that some borrowers can actually keep their payments very close to the same level they now have but go to a 15 year term. This not only saves in over all interest expense over the life of the loan but usually nets the client another half of a percent off the current 30 year rate.
Refinance and invest the savings: As a loan officer that uses a consultative approach to my business, I always explain options. My clients are amazed when I show them the long term benefits of refinancing to a lower rate and then continuing to pay the old payment. It’s absolutely astonishing what happens when you super amortize (prepay) your loan.
I would be honored to help you review your mortgage and create a personalized plan for your financial situation.